What's The Secret To Vietnam's Rise? | Insight | Full Episode

when was the last time anybody saw us beating China in a trade deal while two of the world's biggest economies have been sparring over trade tariffs in the ongoing us-china trade war one country has been winning big Vietnam has been a particular beneficiary of this I think it's probably the largest beneficiary in Southeast Asia but the world is grappling with the increasing spread and adverse impacts of the kovat 19 pandemic how much will it hurt Vietnam's economy the corona virus is going to be a negative because it's going to impact imports from China and of course China also I'd be contributed to the Vietnamese economy through buying goods that it it sells but particularly through tourism about 30% of its tourism receipts is from China and that has actually been wiped up in the last couple of weeks right and that in turn has repercussions for the other parts of the economy because of the multiplier effect as a nation that's heavily dependent on China will covert 19 put the brakes on Viet Nam's growth or is Viet Nam's economy better positioned today for a bounce back [Music] it's the most significant Black Swan of 2020 that is set to wreak havoc on the global economy the disease covered 19 within a very short span of three months has set off a global transmission chain it is hit at least a hundred and ten countries with over 118 thousand cases reported worldwide and nearly 4,300 deaths it has thrown the world in a vortex of fear and sent financial markets into a tailspin it all began in December 2019 with inadequate information about the exact nature of the disease when China first reported this outbreak do I be hit sure and then to the rest of the world the number of cases was not very high I think it was just 41 cases at a time and the nature of the report was such that many of us felt that he was just like SARS and because she was just like SAS which means that it doesn't transmit so well and he was quite fit though the impression that Wuhan will be other controllers and things will come back to normal very quickly the holy found subsequently was dead there was information there was suppressed there ohan and whooping and when we finally made it out including like many many people they have been infected but not reported in the first place with in Hubei Province there have been some clear failings the most important one being they were too slow to to address the outbreak and to let the public know that it was going on and to put in place the kind of measures that could have stopped it at an earlier stage so there are some questions that are being asked in China and outside of China about how the incentives of local officials to bring issues up early and then also the implications of less of impeded information flow based on China's political system when we see that the outbreak has happened in Wuhan it probably started sometime in October and now it seems to be starting to come down that's the normal parts of any type of epidemic the cases climb in as we impose interventions or even if we don't they start to come down but when the virus is exported to another country then the process starts again so for many countries or many regions of the world where there is this virus we are kind of at the starting points where who Han was so while covert 19 may have essentially peaked in Wuhan and in China every other country hits will face its own peak and that's the worrying part as the virus today has traveled across the globe with different countries reporting spikes in new infections the w-h-o is called for the need for global cooperation and for countries to take urgent and aggressive action to turn the course of the coded 19 pandemic if we close down schools we close down factories for instance that also cuts down the transmission of the virus between people and so you can reduce the number of cases but obviously all these measures cannot be done for long because there are other known consequences in terms of how it impacts the economy how it impacts people's likelihood this is not the first it will not be the last in fact the bubonic click in in Europe which killed almost 2/3 of the population was a result of the Silk Road in those days but of course when the silver was closed and treat declined the global economy decline as well so in that sense you can't help it because if there's more air travel there's more interaction between people from different countries we will spread the diseases as well and as the disease spreads there will be more lockdowns causing disruptions to industrial production and global trade flows covert 19 has already begun to have serious implications for the global economy the IMF reports that the overall impact is likely to lower China's real GDP growth rate to approximately 5.9 percent in December 2020 a decrease from 6 percent the previous year and how does this affect Vietnam one of the trade Wars biggest winners Vietnam is very dependent upon China and this is why it is vulnerable to impacts from coronavirus Vietnam is reliant upon China for about 30% of its electronics imports so these are components that Vietnamese factories are importing from China say for local assembly before the finished product like a samsung phone is is sent elsewhere so 30% of its components are coming in from China in the electronics sector Wuhan is an important electronics manufacturing hub and outbound shipments have been affected due to the factory shutdowns as a result of the quarantine measures that has been having an impact on Vietnam with component manufacturing in China's still in varying degrees of shutdown Vietnamese factories are expected to run out of parts over the coming weeks and months because number one the factories didn't reopen for a while number two they have reopened but they're not running at full capacity because they don't have enough workers yet or number three they are still making those those components or products but the logistics of getting the things here whether it's air cargo other things have slowed down or become impossible the trade data for the beginning of 2020 was very weak so overall trade in Vietnam was down by about 12 percent in January and I would expect similar numbers in February and March on the assumption that the corona virus outbreak is brought under control by the end of March will then still continue to see a soft second quarter but probably by jeune things will be returning back to normal many manufacturers in Vietnam are struggling to secure the raw materials they need to remain operational Walter blocker founded Vietnam trade Alliance in 1994 it's one of the first American consumer based companies to set up in Vietnam right when the trade embargo was lifted his businesses are starting to feel the pinch of the kovat 19 outbreak our shipments into Vietnam and it had and it's not perfectly measured yet but they're down about 50% now part of that is is the halo from the from our Tet holiday from our Tet period Chinese New Year we call it Tet in Vietnam and second is the fact that a lot of things aren't flowing which will delay factories running in full production potentially many of them we believe will not have the components they need to run continuously and that will interrupt the supply chain as a knock-on effect Vietnam Trade Alliance is a holding firm with nine operating companies in businesses that include furniture beer and beverage food insurance advertising and digital consumer research and with such a vast portfolio it's a mixed bag when it comes to the impact of kovat 19 on his businesses or a beer business people are gathering less spending less time in the in traditional venues where in our tropical climate people like to enjoy being together now we've been fortunate because other parts of the business have picked up from that but for sure our Everest business has been affected our energy drink business has been affected because people have been delayed going back to work our furniture business today sources much of its componentry from non China sources so we've been able to run production there and the demand for our furniture hasn't been affected our research company has also received many many inquiries we're doing a lot of deep deep dive analysis in the population to understand what the with the mental affected business despite all this Walther blocker hopes that kovat 19 may just be causing a brief setback for Vietnam he thinks that the country is resilient and is sure to bounce back to capitalize on the gains of the trade war Vietnam has the largest trading relationship with the United States than any other country in Southeast Asia when I was a young chairman of the American Chamber in 2001 two-way trade between the u.s. and Vietnam was 1.5 billion dollars the last year it was closer to 60 billion dollars that's an amazing growth [Music] China's entry into the World Trade Organization in 2001 sparked his rapid growth making it the world's Factory the country today thrives as a manufacturing powerhouse and its economy has become integrated into global value chains since 2003 it is the most important industrial producer as it sells more manufacturing goods than any other country in the world China has a dominant position in global supply chains this is because of China's history of having low wages when we had the very high levels of rural urban migration that export based manufacturing in the coast China like Vietnam also had a very good education system so the quality of workers you were getting for the wage rate was very strong and very attractive for international manufacturers at the same time globalization meant that international transport costs were coming down as a share of the product price and China has his large domestic market which also makes it attractive but the dominance of China in manufacturing became the Trump administration's biggest problem as Trump targeted the US trade deficit with China which grew to about 375 billion dollars in 2017 according to trump this was hindering US economic growth so he made reducing the trade deficit a priority by promoting the buy American policy we are going to make our country great again since 2018 the US and China have been locked in a bitter trade battle and the diplomatic relations between two of the world's largest economies has gone downhill dispute has seen the US and China impose tariffs on billions of dollars worth of one another's goods America's had a trade deficit for 40 straight years as a trade deficit with 98 countries bilaterally long before Charlie became a global power obviously tried to not cause this trade problem a country has a trade deficit because it spends more than it produces it borrows and why does America borrow so much is because American households don't save much they spend beyond their income levels it's a view that having this trade deficit with with other countries means that there's less employment and manufacturing and profits that they can obtain from having it within within the US I think it's very much you know it's part of his trade policy part of his sort of platform of you know make America great again improve that sort of manufacturing sector so hence there's been that sort of very big focus on on train and it's quite popular at least in terms of you know the the the moons he's made with our China it's a bit misleading of course to to to gauge trade policy just on simple surpluses or deficits overall and a lot of that comes down to how you how you measure the value of that tree the US trade tariffs in Trump's trade war came in multiple stages over the course of two years and Trump was emboldened by America's economic strength and China's economic slowdown he was prepared to tax all imports this trade war is also misguided people think is about trade the thing is about manufacturing it's actually about getting China to open up or liberalize its services more open China would allow much more investment services in China and Americans have a comparative adage in that area and that is a key issue but even as Trump's measures were increasingly hurting China and as a knock-on effect damaging the global economy Vietnam emerged as a clear winner in the long drawn-out trade war so when a trade war started the first of Vietnam was already well positioned not only geographically because of its proximity to China but also because of the openness of the country of the government towards foreign investors Vietnam has followed the traditional development path that has seen many East Asian economies grow their way from lower to middle and then in some cases up to upper middle or even just upper income status started off as a very agricultural driven economy with a big surplus labor force in rural areas they moved into urban areas into the from the informal into the formal sector and then there was a large labor force willing to work at a low wage and so we had a lot of labor intensive manufacturing coming along this is a function of Viet Nam's young population large labor force comparative to other countries in Southeast Asia and the relatively good infrastructure that Vietnam has particularly around the southern city of Ho Chi Minh City Saigon and also in the north and the corridor that stretches between Hanoi and the port city of Haiphong these are really emerges to industrial beltway's or industrial corridors that have been really attractive to foreign businesses moving to Vietnam in Vietnam has this seamless as an economy and society very similar to China for example its communist its one-party rule it's also in terms of organization completion istic vietnam has a young population there's just emerge from couple of decades of you know deprivation as a result the wars against the US and the French also they have had a lot of investments coming in from China as well and economic cooperation between Vietnam and China has been very helpful to a large extent to the economy of Vietnam with a population of around 96 million has improved by almost 8 percent because of the shift in production resulting from the us-china trade war the country's proximity to China is particularly suitable for companies that want to move manufacturing operations to Vietnam instead of abandoning the Chinese market investors are choosing to supplement Chinese operations with low-cost inputs sourced from production facilities in Vietnam this production model has become widely known as China plus one strategy the companies had a lot of supply chain exposure just to the the China market or the China geography so there has been a desire to maybe have a diversification in place so that if something happened in China that you had a backup option and also recognition that as China's wages were rising so fast it was going to not be as cost competitive in the future as it was at the time so Vietnam was one of those economies that that many firms update because it had a lot of the similar characteristics to China in many ways it was easier to do business in Vietnam as a foreign firm than a local firm and there's not many countries waves that way around it's all about not putting all your eggs in one basket it's it's about having China still as a as a you know as a very strong part of the the value chain but it's about not being completely entirely dependent on on China it's not just China plus one in Vietnam it would be for a lot of companies it would be China plus three and I think again if we put everything in the context of this changing world that's being influenced by more geopolitics by what I call techno nationalism when we're talking about the technology sector a lot of these companies that are looking at a China plus one China plus two strategy are going to have to figure out how to become regional and local companies in all their key markets around the world and they're looking at what they can do here or looking at expanding what they can do here so I think business is gonna keep growing and and a lot of it is built on the back of the political and economic stability we have seen here in in Vietnam the currency is incredibly stable versus the US dollar growth is strong inflation is low the work force is smart and hardworking and kind of a sweet spot demographically there's no question that Viet Nam's kind of a stability and integration and the world economy that's going to continue and I think that that gives a lot of confidence to companies and investors that are looking at Vietnam Vietnam education and infrastructure are better suited to assembly relatively low value ad manufacturing than many of the higher value-added processes becoming popular in mainland China foreign investors often choose to enter the Vietnamese mark gradually as a result of these limitations basic components or assembly usually the first aspects of the production to be outsourced to Vietnam for them to actually take that group to the next level they need to actually be conscious of the fact that increasingly the country will probably need to open up its markets a little bit more like for example ease up on the capital controls right the Vietnamese dong now it's easy it's not so difficult invest in Vietnam but when you want to exit it is not that straightforward so do you need to actually make sure that investors have an exit plan at the end of the day to be able to exit and therefore actually get the investments out as well but I would say that Vietnam has been replicating the China success story quite successfully today extent the majority of Viet Nam's gains came from exports of goods covered by US tariffs on China especially those businesses that could swiftly relocate to factories outside China exports to the US jumped by thirty four point eight percent in the first nine months of 2019 the country's GDP remained robust at seven percent highest in Southeast Asia as per official government figures it has attracted a plethora of multinational companies including Intel Samsung and LG all of which have made huge investments let me talk about Vietnam export success story I mean a big chunk of that is actually Samsung's manufacturing export success story in Vietnam and South Korean companies have been very very big investors and not just Samsung but others as well in Vietnam and so it has moved into the electronic sector with closed linkages into supply chains in South Korea and also supply chains in China looking forward there are Viet Nam's government has it in place a number of policies to try and encourage continued investment in higher value manufacturing I think there are two ways this will manifest itself the first is increasing investment in supply chains right now Vietnam is still very dependent on China and other countries in Southeast Asia for many of the components that are used in the manufacturing processes here the other place I think that manufacturing will continue to take off is in the auto segment sector there's a lot of competition to be automotive manufacturing hubs because automotive is a sector that kind of tones that the heartstrings a bit more I it gets a lot of government subsidy in other places but as a result the automotive market is is over supplied globally and so automotive manufacturing plants there actually been struggling for profitability so it's been a sensible move from Vietnam to to focus on the electronics sector which is of course partly been deliberate choice but also been the result of Samsung's very big very big investment with more investments coming in and more companies moving manufacturing to Vietnam production in the country went into overdrive in June 2019 Vietnam drew the ire of the Trump administration because of its growing trade surplus with the US and it very much looked like it would be Trump's next target for increased tariffs I would assume that trumps fixation with with trade deficits goes back decades and his his frame of reference which is a very zero-sum [Music] frame of reference when it comes to trade it's a very mercantilist kind of view of trade you know you're either winning or you're losing and you win by having a surplus [Music] you [Music] the Trump administration had Vietnam in its sights due to its rising trade surplus with the United States in June 2019 Trump described Vietnam as the single worst abuser of everybody this led to mounting speculation that Vietnam could be the next battleground for Trump Vietnam of course has become a transit point if you will or a transshipment point for goods from China as well so if you look at the the trade flows and the exports from Vietnam immediately following the the imposition of tariffs in the us-china trade war there was a huge bump in exports so the question was well how much of that was actually manufactured or goods that were substantially transformed and actually were truly of country of origin Vietnam and how many of those Goods were actually just transshipped and and relabeled so the the transshipment issue obviously got the attention of Washington they deficit with Vietnam has increased significantly it's actually about 56 billion at the moment it's increased by about 50 percent over the last year and so it's it's even surpass Thailand so they've taken notice of that and of course for the Trump administration you know how the size of their bilateral trade deficit is are quite important Viet Nam's very government's very conscious of this there being the saying that we are going to you know they're going to increase their vigilance and surveillance of this in the first half of 2019 Viet Nam's trade surplus with the u.s. rose thirty nine percent to twenty five point three billion dollars and in July the US lap tariffs of more than four hundred percent on steel imports from Vietnam saying they originated in Taiwan and South Korea the rationale for tariffs on Vietnam are largely due to two factors one is the perception that Vietnam is a currency manipulator and the second is the trade deficit however in the most recent US Treasury Department report on currency manipulation Vietnam was considered to only be meeting one of the three that is the trade deficit categorizations for a currency manipulator so if anything the u.s. Vietnam relationship has actually been strengthened and and these concerns from the US side about currency manipulation which are linked to the trade deficit have actually diminished since last November Vietnam has been a strong security supporter for the u.s. in Asia so that's given it a support base in the Washington DC establishment particularly the defense establishment and then also the focus has just been very much on China and then because Vietnam has been the alternative supplier it's meant that the US has been able to sanction Chinese exports but still have another place to to get supply into the u.s. so Vietnam has been safe so far the US was Vietnam's biggest export market followed by the EU and China however Vietnam also spent fifty seven point nine eight billion dollars on importing goods in the first quarter of 2019 up eight point nine percent you can see in recent visits by President Trump there have been a number of trade deals signed with Boeing Jets often the headline of these events and these this kind of growing the two-way relationship initiatives is very likely to continue in the long run I think Vietnam and the United States agreed that imported United States liquid natural gas is the is a long term answer to this question it addresses a number of strategic needs for Vietnam in terms of electricity generation soon after Trump's statement Vietnam eats billions in purchases from Boeing and General Electric seeking to rein in its trade surplus with the US but there's a limit to how much Vietnam can purchase from the United States Vietnam knows that there are things it can do besides just balancing trade that'll also make the White House happier and that is some of these kind of nuisance rules and regulations that have been creating market access problems for American companies Vietnam has been working very hard to listen to the concerns of the US business community and of the the Trump administration and to try to make some progress in those areas which we've seen but we expect to see more progress so while there's not a fifty billion dollar check they can go out and right they certainly can do things to take a big bite out of that structural trade deficit and show that they're making progress and heading in the right direction Vietnam continues to attract record foreign direct investment it's one of the world's top investment destinations according to data from Viet Nam's foreign investment agency FDI in Vietnam in the first five months of 2019 reached a four-year high of sixteen point seven four billion dollars an increase of 69 percent Viet Nam's attractiveness of it as an investment destination is driven by both its attractiveness as a manufacturing site but also the growing consumer market that Vietnam represents you remember Vietnam is approaching 100 million citizens it's no longer a lower-income country but a fast-growing lower middle-income country that has the goal of hitting it becoming a middle-income country within the next 10 to 15 years so there's a lot of enthusiasm both for Vietnam as a manufacturing export site but also as a as a market in of itself it's important when we're thinking about FDI inflows that you can't just build a factory instantly so over the last five years we've actually seen that FDI flows have grown by on average into the manufacturing sector by about eleven percent per annum so there's still a strong number in fact looking at a scorecard when we're looking at the region of FDI attractiveness we actually ranked Vietnam as number one they're looking to attract clean sustainable green high-value FDI that really helps Vietnam manufacturing make a jump to the next level most importantly Viet Nam's free trade agreements are set to provide a huge boost to its economy over the past few years Vietnam has been active in signing bilateral trade agreements with countries throughout the world latest was a landmark free trade deal with the European Union Viet Nam's some expert profile is very different for me use export profile and therefore there is no cannibalization anyway in either direction so it will be where we would be a lot more positive for Vietnam given the fact that the economy is so much more smaller than the EU I mean therefore and with the opening of the EU VAT a free trade agreement it gives Vietnam access to a much bigger market with lower tariffs and therefore that's gonna be very positive for Vietnamese exports the TPP would have been a huge boost for Vietnam because based on our studies we felt that Vietnam was actually the biggest beneficiary of the TPP but unfortunately there has been shelved and therefore the RCEP in turn it's not gonna be as big a beneficiary for Vietnam the EU Vietnam free-trade agreement is a deep free trade agreement the CP TPP is a deep free trade agreement we're at a point now where supply chains are becoming more and more automated where technology is being used more and more to achieve transparency within supply chains or what I call the five T's right transparency truth trust technology of course and talent right so all of these things are needed now to properly manage cross-border trade and cross-border value chains and we're seeing now a convergence of these new values baked into these FTAs with the emergence of new technologies that are going to allow the management the verification of these standards and that instantly is a huge business opportunity one of the theories ins why Vietnam can still be considered as an attractive destination for FDI inflows and you know why we actually think that growth will you know remain quite quite healthy is actually it's part of ozone and as part of ozone and also that means that it's actually being it's benefiting from these trade agreements and that are being negotiated of interest though of course there's always got to be about we've got got the goods Vietnam is you know gonna be have more markets being open to it it's what actually can open up in terms of the services as well Viet Nam's GDP has been experiencing positive growth since 2014 and is projected to continue to do so through 2024 the covert 19 outbreak could potentially put the brakes on Viet Nam's phenomenal growth how much and it hurt Viet Nam's economy every day everyone's losing money [Music] [Music] Vietnam has many trade advantages over China labor costs are cheaper and the country is a signatory to many bilateral trade agreements and despite its trade surplus with the United States the Trump administration verse far has been pleased with Viet Nam's multi-billion dollar purchases of American goods can Vietnam be the next China no I don't think Vietnam can become the next China simply because it doesn't have the scale china has massive scale China has been building infrastructure for three decades now and you know China has very very intense critical mass when it comes to certain sectors within the the global value chain so if somebody comes here and they say I'm making two million shoes a year where can I set up where you where all of a sudden I can just get 50,000 workers and that's not so easy you know we say well 8,000 10,000 no problem but 50,000 much more of a challenge and and as people look around they realize hey this is why we were doing this in China it made sense for companies to be there China is about 29 times bigger than Vietnam and its population of nearly 1.4 billion is no match for Viet Nam's 96 million Vietnam is roughly the same size as China's most populous southern manufacturing base of Guangdong province but has a population of around 113 million according to the Guangdong Statistics Bureau the province alone accounted for 58 percent of the total workforce in 2018 so Vietnam is never going to have that same dual attraction of an export manufacturing base with a very attractive domestic market to service as well Vietnamese market is much smaller partly that's about population but it's also about just very low levels of GDP per capita so for those companies manufacturing in Vietnam they're not really that concerned about the domestic market so that's a big difference from China I think Vietnam has already replicated China's export model pretty successfully [Music] since January 20 2008 to the Kovach 19 outbreak the trade war winner is set to lose billions of dollars as Vietnam's economy is dependent on China's the country has already begun to feel the pinch many factories have been unable to get raw materials from China and with borders closed exports of goods to China have suffered as well beyond manufacturing the agriculture a large chunk of Vietnam's agricultural exports are sent to China there were stories in the Vietnamese media in recent days of over 600 containers of Vietnamese agricultural products being stuck at the northern border because they weren't being allowed to cross so there's a real challenge there for agricultural producers dragonfruit is a particular export that is very popular in china and is i thrown across much of southern Vietnam and that's having a particular tough time and then the third sector beyond manufacturing an agriculture that I would speak about is tourism the disruption will come from tourism because Viet Nam's tourism is very dependent on China in fact about 30% of its tourism receipts is from China and that has actually been wiped out in the last couple of weeks right and that in turn has repercussions for the other parts of the economy because of the multiplier effect so from that angle the Vietnamese economy also slowed down by anywhere between 0.5 to 0-9 percent as a result of lower tourism traffic and the Chinese tourists are not just bigger than numbers but they also by far the biggest spenders in Vietnam according to Viet Nam's Department of Tourism the estimated direct damage to the country's tourism industry could reach anywhere from three to four billion US dollars but Vietnam is no stranger to handling medical crises in 2003 at the height of the SARS outbreak Vietnam pulled all the stops to control the disease in April that year the World Health Organization declared Vietnam to be the first nation to contain and eliminate the disease Vietnam did something in 2003 that perhaps sounded drastic by today's standards so in that one Hospital where they had SAS cases they literally locked it down and they stopped anybody from coming in and out and if you read the reports of those times the health care workers and the patients they were very traumatized by what happened but because it was in some ways very decisive even though it might seem a very difficult decision to make today they were able to contain the outbreak in Vietnam so there was SAS in 2003 but the nature of kovat 19 is different from that of SARS and the impact to the global economy could be more severe with nearly a hundred and ten countries affected and over 118 thousand cases reported worldwide today factory lockdowns are disrupting supply chains and resulting in supply Vietnam has been one of the world's fastest-growing economies for the last couple of years in the top 5 in in 2018 top 5 2019 it's probably not quite going to be top 5 in 2020 due to the coronavirus impacts but it will probably still be top 10 at the EIU we have were on average over the next 5 years we expect growth in Vietnam to be about 6.4 percent so a very very fast rate of growth in 2020 we were expecting the economy to grow by 6.9 percent that's probably now going to be revised downwards to around about 6.2 percent or so as a result of the disruption in the first quarter due to coronavirus but that is still a very fast growth rate in a global context we think that the krona virus is going to have largely an impact in q1 it's going to be similar to SARS going to be a high-impact short-lived so we're expecting the majority of impact in q1 reflecting both lower tourism numbers due to restrictions and Chinese and China the Chinese tourists but also some global supply chain disruptions now we do actually expect that as we move into q2 that we should actually start to see some normalization in production in 2003 China's GDP was 1.6 trillion as of last year China's GDP was fourteen point eight trillion almost ten times the size and you can't discount that impact so the impact is huge talent unfortunately is going through a very severe phase because it's facing its worst drought in 40 years and at the same time as exports last year was affected by the very strong Tibor and also by the trade dispute between China and the US right and we have not seen a recovery in that at this point in time and now we get both the virus and the the drought happening - so Thailand as an economy is probably going to be probably one of the worst hits around this region Singapore is very export dependent and we've already seen that tourism numbers are down and also the fact that with these supply chains that's impacting their exports as well so we've also taken an gdp down from 1.4 percent that we're expecting previously - about 1% for Malaysia we've also lowered that from 4.1 to 3.9 now within these countries what we are seeing is that we're expecting more monetary policy support that we already saw Thailand reduce rates as did Philippines as well but also we're expecting some more fiscal support the kovat 19 outbreak is also a grim reminder of the extreme concentration of manufacturing built up in China the more connected the world is the more disruptive it's functioning gets a single bottleneck can harm the whole supply chain so shutting down gigantic plants in China has created a gigantic bottleneck I think that a lot of the business that left China is not going to come back to China I think that what we see right now with the with the coronavirus that's not something that is China's fault but it certainly helps reinforce what a lot of companies already knew which was it's very risky to rely too much on one country for your supply chain or your business plan so the people that we're diversifying around that they're coronavirus is just one more reason that they feel that they should be in a place like Vietnam and so I think it's a long-term trend that we're going to see continue if you have the automation if you have the technology if you have the whole ecosystem in place it makes much more sense to make where you sell you know if you can derive benefits from a global economies of scale great but if you can pack that all in two and cut costs and still get all the benefits of human capital of automation of technology all this all the stuff in a global value chain that used to be unbundled and placed all over the world if you can just replicate that in in key markets and and produce as close to those markets as possible that's a much better business model China accounts for 20% of the world's manufacturing that's over two trillion dollars in output the covert 19 outbreak with an epicenter in Wuhan China set in motion a global economic slowdown and the world is still grappling with how great its impact will be the bounce-back outside of China will mirror the bounce back within China because that's the main channel through which the coronavirus economic impact is happening so I think the bounce backs will largely mirror each other but outside of China some of the worst affected economies Hong Kong Macau Taiwan Vietnam Thailand and Singapore are probably the most affected a tear below that places like Australia where tourism and and minerals exports to China are quite important same with Korea and Japan China a very important trading partner but those economies are very large and quite diversified our hope is that we can see continued improvement day by day in how people view the coronavirus that this becomes a more normal situation and that things you know get to a place where people aren't worried about working in certain places and that business can continue because until that happens every day everyone's losing money and and and and it's impossible to think that that's not going to have continued negative impact you

Channel: CNA Insider

Views: 340,854

Rating: 4.6216569 out of 5

Keywords: cna, cna insider, cna insider insight, asian perspectives, asia stories, vietnam, china, rising asia, covid-19

Id: 7zMkL7ZHQ7M

Length: 45min 41sec (2741 seconds)

Published: Wed Mar 25 2020